I bet that you’re really sick of lack of cash in your business, and I mean really sick of lack of cash in your business. What if I showed you a simple tool that you can use that will help you make having cash shortages a thing of the past? If that sounds like something you’re interested in, just watch this video about cash flow forecast.
Today we’re gonna talk about why you need to do a cash flow forecast. Your cashflow forecast is even more important than having a budget. Without cash, your company just won’t be able to keep operating. This is something too many business owners ignore and they ignore it at their peril. Lots of business owners I know greatly went out of cash. And when I talk with the owners as business, they’re often blindsided every time this happens. If this is you, I have an easy solution to the problem and that’s what the topic of today’s video is.
I bet that if what I just said applies to you, you’re really sick of lack of cash in your business, and I mean really sick of lack of cash in your business. What if I showed you a simple tool that you can use that will help you make having cash shortages a thing of the past? If that sounds like something you’re interested in, just keep watching this video.
Hi, I’m Josh Patrick, the founder of The Sustainable Business, Cracking the Cash Flow Code, and tons of other programs. I’m also the author of Sustainable: A Fable About Creating an Economically and Personally Sustainable Business.
There are two things that you need to be doing when it comes to understanding what’s happening to your cash.
The first is you need to develop a cash flow forecast which very simply is a budget for how you’re going to use your cash, how much of your cash is gonna go to operating, how much of your cash goes to taxes, how much of your cash goes to profits. And by the way you should always start off with how much do you need for profits, because everything else should flow off that.
The second thing you need to do, you really need to have a dashboard that monitors the use of your cash, and you need to review this on a weekly basis. Now I find that when businesses monitor through a dashboard what’s happening to their cash, the days of running out of cash rapidly become a thing of the past.
So when you do this, here’s four things that are gonna happen. First is when you have a cash flow forecast in a dashboard, you know where you stand. If you have a problem and you set up your cash flow forecast properly with your dashboard properly, you’re gonna know weeks and maybe months in advance that you got a cash crunch coming down the road, you have an early warning system.
The early warning system is something that is just so important. I know that when I have an early warning that I got a cash flow crunch coming down the road, or I’m gonna have a shortage of cash, I know I need to be taking action, and I often know the type of action I need to take, because I have enough time to do this proactively, not reactively. If you don’t have a dashboard, every time you have a cash flow crisis, you’re gonna be reacting. If you have a dashboard, every time you have a cash flow crisis, you’re able to deal with it before it becomes a crisis. If the same thing keeps happening over and over, it becomes obvious because you’re measuring things.
If you’re not measuring things or writing stuff down, it’s really easy to think that gee this happened really a long time ago, and it might have only been three weeks ago that you had a cash flow problem, or three months ago, or it happens the same time every year. Once you start writing stuff down, it becomes obvious when and why you’re having a cash flow crisis.
And the last thing is, and I don’t know why this is true, but what you measure gets done. I know that when I start measuring things, whatever it is I measure, that metric is gonna get better just because I’m looking at it. And what happens is it gets to the front of my mind and I start paying more attention.
So here are four things I want you to do.
First, I want you to work with your accountant to develop a cash flow budget.
Second thing I want you to do, and this is even more important, I want you to have a monitoring system in place that make sure that what you think is gonna happen to your cash actually does happen.
Third thing, I want you to develop a dashboard. Now I don’t want your dashboard to be what your profit was last month, or what your cash flow was last month. I want you to develop a dashboard that’s gonna help you predict what your cash flow is gonna be in the future. That means you’ll need to be measuring the backlog, how much work do you have that you haven’t done yet for customers, are you making enough sales calls, do you have enough proposals out in the field. If those things aren’t happening, it’s almost a sure thing that you’re gonna end up running out of cash, and that’s something that frankly none of us wanna have happened.
Finally, I want you to have a weekly meeting to review your dashboard, and a monthly meeting to review your cash flow budget with all the key people in your company. You can’t keep this stuff secret because frankly when you have a cash flow crisis or a cash flow thing going on, it’s not just you that’s gonna solve that problem. I hope you get everybody involved and everybody aware of what’s going on, and help your people realize what they can do to make your cash flow crunch just a little bit less.
So that’s what I really highly recommend you do when it comes to start measuring your cash flow so you’ll understand why you need a cash flow forecast or why you need a dashboard, and without those things, you’re likely gonna keep having the same problem happen over and over and over again. Now you don’t wanna live in Groundhog Day, you wanna have the thing happen once, learn from it, move on.
So why don’t you scroll down, leave a comment, and DOWNLOAD our free infographic on what it takes for you to crack the cash flow code in your company. Hey, this is Josh Patrick. Thanks a lot for stopping by. I hope to see you back here really soon again.